Your handy health care cheat sheet

Posted: Monday, August 17, 2009

By Alec MacGillis

Health care reform is not that hard to understand, and those who tell you otherwise most likely have an ulterior motive.

Reform proponents exaggerate the complexity of the issue to elevate their own status as people who understand it; opponents exaggerate it to make the whole endeavor out to be a bureaucratic monstrosity.

This gets a bit tiresome for reporters such as me who are writing article after article about the debate, only to have another pundit, politician or colleague dismiss the whole subject as an incomprehensible mess. Well, health care is a mess. Our current system is a mishmash that consumes 16 percent of the economy. Fixing it could be very simple: a single-payer system. To the dismay of many liberals, President Obama and congressional Democrats think it's more realistic to build on what's already there, which is why legislation overhauling it comes in the form of 1,000-page tomes.

Yet the basic outlines are emerging. What follows is an attempt to boil the health-care debate down to 1,000 words - a summary you can take to the beach or on the plane or, if you already know it all, send your Aunt Millie. Love the proposals or hate them, people can try to make sense of them. There is no excuse!

Let's start with the problem that Obama and the Democrats are trying to solve. It's actually two related problems. First, there are 47 million people in this country without insurance. Second, health-care costs have been surging to the point where premiums are eating up more of our paychecks and where Medicare and Medicaid are badly straining the national budget.

The proposed solution to the first problem is straightforward: The legislation on the table makes Medicaid available to more people and covers others by helping them buy their own insurance, with subsidies based on income. The venue for people to buy insurance will be an "exchange," a marketplace that would replace the uncompetitive and lightly regulated landscape that now confronts individuals and small businesses trying to buy coverage. Insurers on the exchange would have to meet basic standards and would no longer be allowed to deny coverage or price it exorbitantly because of pre-existing conditions; they'd still be able to set rates based on age, but not to the degree they do now.

The thinking is that insurers will comply because they will want the customers coming to the exchange, notably the younger and healthier uninsured. This is one reason all the proposals would mandate that people buy insurance, or risk paying a fine. This would draw younger people, who spend relatively little on health care, into the exchange, lowering the price of coverage for everyone. At least at the outset, larger businesses and people who receive coverage from their employers probably wouldn't be able to buy on the exchange, to keep the employer-based insurance system that covers most Americans from unraveling.

Extending coverage to the uninsured will cost a lot - around $1 trillion over 10 years. But the country spends more than twice that much on health care in a single year, and the Medicare drug benefit passed in 2003 was expected to cost more than half as much. Obama proposes paying for most of it by squeezing money out of Medicare and Medicaid, including the subsidies that go to private Medicare Advantage plans and Medicaid funds that hospitals get to treat the uninsured. He would pay for the rest by shrinking the itemized deductions of wealthy taxpayers, which Congress has resisted. Other money-raising ideas include higher taxes on millionaires, proposed by House Democrats, and a plan being considered by the Senate Finance Committee, which is still drafting its legislation, to impose a tax on the most expensive health plans.

The debate over helping the uninsured has gotten tangled up with the other major challenge, slowing the growth of overall health-care spending. Republicans deride Obama and the Democrats by saying they claim to be saving money even as they expand coverage, an impossibility. Reformers say this is unfair - they acknowledge the upfront expense in trying to cover the 47 million but say their parallel attempts to "bend the curve" on spending will reduce costs over the long run for everyone. They say it makes sense to do both at the same time - to mix the honey of broader coverage with the bitter medicine of cost control.

What is unclear is if the proposals will achieve long-term savings. Reformers tout a new federal effort to determine, with the help of computerized records, the "comparative effectiveness" of treatments. But they say this effort will not take cost into account or issue firm guidelines over what to cover - assurances made, in part, to avoid upsetting providers and patients groups. End-of-life care eats up a huge slice of spending, but the proposals do little to address this directly. And the clause in the House bill about providing Medicare reimbursements to doctors for counsel on end-of-life questions originated in an earlier proposal backed by Republican senators.

Similarly, the bills call for empowering a federal panel to set Medicare rates free of pressure from providers, and for programs to test payment models that emphasize the quality of care instead of the quantity of treatments delivered. But these steps may not be enough to bring about the change that many experts urge - away from a system in which we pay for every MRI or drug infusion on a case-by-case basis, and toward one in which salaried medical professionals are paid to do what it takes to keep us healthy.

Dominating the whole debate is the question of whether to include a government-run insurance plan on the exchange. Proponents say such a measure - included in the House bill and the Senate health committee bill - would provide the uninsured with a guaranteed high-quality plan, in case insurers still try to game the rules to deny coverage or payments. They say it would also restrain the overall growth in costs. A low-priced competitor, the logic goes, would drive insurers to pressure doctors to deliver the most cost-effective care. Providers would agree to do so to keep insurers in business and avoid being left with only a government plan. The bills call for setting the plan's rates slightly above Medicare rates, to avoid putting too much cost pressure on providers. But opponents of the public option predict that the government would set the plan's rates so low that it would drive private insurers out of business.

These are the main features of what Congress will take up come September. The two Senate bills must be merged into one, followed by votes in each chamber and a conference committee to reconcile the House and Senate bills, and then a vote on the final product. It's your health care. Don't let anyone tell you that it's somehow beyond your grasp.